the Living Costs and Food Survey David Hayes 29 th January 2014 - - PowerPoint PPT Presentation

Exploring patterns of expenditure: Segmenting the older UK consumer using the Living Costs and Food Survey David Hayes ESRC/AGE-UK Showcase Event 29th January 2014

1 www.pfrc.bris.ac.uk/esrc

Our Approach

• Using the Living Costs and Food (LCF) Survey, we:
• 1. Describe average household expenditure by age

(using descriptive analysis);

• 2. Segment older households based on their patterns
• f expenditure (using cluster analysis);
• 3. Explore cluster membership (using descriptive and

CHAID analysis).

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• Alcohol & tobacco
• Clothing & footwear
• Communication
• Education
• Food & non-alc. drinks
• Health
• Household goods &

services

• Housing, fuel & power
• Recreation & culture
• Restaurants & hotels
• Transport
• Miscellaneous goods &

services

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Standard LCF expenditure categories

Data Considerations

• Good sample of household heads aged 50+
• To cover transition into and beyond retirement
• Total sample size of 2,769
• Good distribution of age groups (even 80+ ~ 12%)
• Equivalised expenditure
• To take account of household size

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Absolute and equivalised expenditure by age

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510 189 286 160 100 200 300 400 500 600 50 but under 55 yrs 55 but under 60 yrs 60 but under 65 yrs 65 but under 70 yrs 70 but under 75 yrs 75 but under 80 yrs 80 and above Pounds per week (£) Absolute Equivalised

Proportion of total expenditure by age ↑ Food & non-alc. drink increases: 12% to 19% ↑ Housing, fuel & power doubles: 12% to 24% ↔ Communication constant: 3% ↓ Clothing & footwear halves: 6% to 3% ↓ Transport decreases: 18% to 7% ↓ Recreation drops: 16% to 11%

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The segmentation (clustering) process

• Exploring how types of expenditure co-vary
• Identifies dominant patterns
• Classifies people into segments based on these
• Clustered on the 12 expenditure categories
• ...the optimal solution contained six clusters

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Drivers of cluster membership

• Highly statistically significant variations in

expenditure for all 12 categories

• Three categories were particularly strong
• Alcohol and tobacco
• Clothing and footwear
• Housing, fuel and power

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The clusters

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The average equivalised expenditure across the sample is £217. Percentage in cluster (%) Mean weekly expenditure ‘Conservative consumers’ 46 138 ‘Foodies’ 19 228 ‘Burdened by bills’ 11 231 ‘Smokers’ 9 245 ‘Recreation and clothing’ 4 392 ‘Socialites’ 12 405

Conservative Consumers

• Spent £138 on average
• Transport (£18) much lower than average (£32)
• Only 47% connected to the internet
• More likely to be the oldest old (22% cf. 15%)
• 38% in the lowest income quartile; 60% retired
• 56% gave benefits as main source of income

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Spend far below average

• n non-essentials (such

as recreation and hotels)

Foodies

• Spent £228 on average
• Close to average expenditure in most categories
• A half (54%) live in two-adult households
• Very few households are renting (12%, cf.25%)
• Only 18% in lowest income quartile
• Larger houses (58% cf. 50% with 6+ rooms)

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Very high expenditure

• n food (£58 compared

to the average of £34)

Burdened by Bills

• Spent £231 on average
• All other expenditure is relatively low
• Low transport costs (lowest petrol expenditure)
• 70% in rented accommodation (cf. 24%)
• Including 45% from a social landlord
• More single households

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Very high proportion of expenditure on housing costs (£4 in every £10, twice the average)

Smokers

• Spent £245 on average
• Very high spend on alcohol and tobacco (£36 per

week/15% of total expenditure, cf. 3%)

• One of the ‘younger’ clusters (62% under 65)
• Almost a third still in full-time employment
• Home-ownership is relatively low (42% cf. 54%)

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Spent £28 a week on tobacco products

Recreation and Clothing

• One of the two high-spending clusters (£392)
• High spend on recreation (£65) & transport (£53)
• Only 21 per cent of this cluster are 70 and above
• Two-thirds in larger houses (6+ rooms)
• 20% say benefits main income (cf. 10% socialites)
• Half of the cluster in the highest income quartile

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At £65 each week, these fashionistas spend more

• n clothing than all the
• ther groups combined!

The Socialites

• One of the two high-spending clusters (£405)
• Spent £96 on transport costs (24% cf.15%)
• Three quarters under 65; 41% working full time
• Income – 57% earnings; 33% investments
• More than half in highest income quartile
• 90% of households connected to the internet

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Enjoy the finer things in life, spending £131 per week on eating out, holidays and recreation

Important socio-demographic characteristics

• Tenure: 97% of Socialites were homeowners
• Compared with 29% of Burdened by Bills
• Age: 40% of Smokers aged under 60
• Compared with just 26% of Conservative Consumers
• Income: 7% of R&C in lowest income quartile
• Compared with 39% of Burdened by Bills

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Policy implications

• Expenditure poverty not atypical
• Housing costs key in wellbeing
• Smokers are young (stop/morbidity)
• No such thing as the ‘older consumer?’
• Depends on preferences/constraints, resources,

mobility

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What else would help inform policy?

• Conservative Consumers are a diverse group
• Positive/negative constraints?
• Hostels, boarding houses, and institutions such

as rest/care and nursing homes are excluded

• The true effect of ageing vs. generational effects

remains unclear – further analysis needed

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Questions and further discussion

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• http://www.bris.ac.uk/geography/research/pfrc/esrc/
• david.hayes@bristol.ac.uk
• @PFRC_David